[PPT] - Capital Markets Day Improving the Car Buying Journey from search to PowerPoint Presentation

SLIDE 1

Improving the Car Buying Journey from search to transaction

Jason Biffin & Karolina Edwards-Smajda

Capital Markets Day

SLIDE 2 Not for publication, transmission, distribution or release, directly or indirectly, in or into any jurisdiction in which the publication, transmission, distribution or release of this document would be unlawful. By attending the meeting where this presentation is made or by reading this document, you agree to be bound by the limitations set out below. This presentation is being communicated only to and is only directed at those persons (i) in the United Kingdom that are (a) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”), or (b) high net worth entities or other persons falling within Articles 49(2)(a) to (d) of the Order, or (ii) to whom it would otherwise be lawful to distribute it, and should not be relied upon by any other person. The information contained herein is for those persons attending this presentation (and to whom this presentation is directed) only, and is solely for their information and may not be reproduced, further distributed or passed on, directly or indirectly, to any

ther person or published in whole or in part for any purpose.

This presentation does not constitute or form part of and should not be construed as an offer of securities for sale or subscription of or a solicitation of any offer to purchase securities in the United States. Securities may not be offered or sold in the United States absent registration under the US Securities Act of 1933, as amended (the "US Securities Act") or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act. Auto Trader Group plc (the "Company") does not intend to register any securities under the US Securities Act or with any state or other jurisdiction of the United States, and it does not intend to offer any securities to the public in the United States. This presentation is for information only. This presentation does not constitute or form part of and should not be construed as an offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any securities of the Company in any jurisdiction nor is it an inducement to enter into investment activity nor should it form the basis of or be relied on in connection with any contract or commitment or investment decision whatsoever. It does not constitute a recommendation regarding any securities. Past performance, including the price at which the Company’s securities have been bought or sold in the past and the past yield on the Company’s securities, cannot be relied on as a guide to future performance. Nothing herein should be construed as financial, legal, tax, accounting, actuarial or other specialist advice. The information and opinions provided in this presentation are provided as of the date of this presentation. Certain statements in this presentation constitute forward looking statements (including beliefs or opinions). Any statement in this presentation that is not a statement of historical fact including, without limitation, those regarding the Company’s future expectations, operations, financial performance, financial condition and business is a forward looking statement. Such forward looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those expressed or implied by such forward looking statements. These risks and uncertainties include, among other factors, changing economic, financial, business or other market conditions. These and other factors could adversely affect the outcome and financial effects of the plans and events described in this presentation. As a result you are cautioned not to place reliance on such forward looking statements. Nothing in this presentation should be construed as a profit forecast. No reliance may be placed for any purposes whatsoever on the information contained in this presentation, or on its completeness, accuracy or fairness. No representation, warranty or undertaking, express or implied, is or will be made or given by or on behalf of the Company or any of its directors, officers, advisers, agents or employees or any other person, as to the accuracy, fairness or completeness of the information or opinions contained in this presentation and, to the extent permitted by law, no liability whatsoever (in negligence or otherwise) is accepted by the Company or any of its respective directors, officers, advisers, agents or employees, or any other person, for any loss, howsoever arising, directly or indirectly, from any use of such information or opinions or otherwise arising in connection therewith. In particular, no representation or warranty is given as to the achievement or reasonableness of, and no reliance should be placed on, any projections, targets, estimates or forecasts contained in this presentation and nothing in this presentation is or should be relied on as a promise or representation as to future events. Any reliance you place on the information contained in this presentation will be at your sole risk. The information set out herein may be subject to updating, completion, revision, verification and amendment and may change materially. None of the Company, its directors, officers, advisers, agents or employees or any other person undertakes to or is under any obligation to update or keep current the information in the presentation or to provide recipients with any additional information.

Disclaimer

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SLIDE 3

Break – 15 mins

1.00pm-2.15pm

Agenda

Introduction Jamie Warner Overview: 3 Years On Trevor Mather & Nathan Coe Q&A Session Improving the car buying journey Jason Biffin & Karolina Edwards-Smajda from search to transaction

2.30pm-3.50pm

How we help improve a retailers business Le Etta Pearce & Darren Moon Delivering value for car manufacturers Ian Plummer & Naomi Hahn Demonstration on Customer Performance Dashboard Darren Moon & Mike Bongiorno Break and move offices – 25 mins

4.15pm-5.20pm

Demonstration on i-Control Karolina Edwards-Smajda & Stuart Leatherbarrow

5.20pm-6.30pm

Drinks

AUTO TRADER OFFICES HAVAS OFFICES HAVAS OFFICES

Q&A Session

3

SLIDE 4

Overview: 3 years on

Capital Markets Day

Presented by Trevor Mather, CEO & Nathan Coe, COO & CFO

SLIDE 5

In the past 3 years we have strengthened and delivered on the key investment highlights outlined to analysts and investors at the IPO

Source: Unconnected analyst presentation 22nd April 2015

5

SLIDE 6

We also delivered on financial commitments

Revenue Profit margins Capital policy

We said: High single digit revenue growth We said: We would continue to increase profit margin We said: We would leverage to under 2x, increase dividends to 1/3 of net income and start a share buy- back programme We delivered: CAGR of 9% since March 2014 We delivered: Increased OP margin by 23%pts We delivered:

Reduced leverage to 1.55x

through profit growth and repaying £197m of debt

Increased dividend every

year to 1/3 of net income

Returned just over £260m of

cash to shareholders to date

237 .7 255.9 281.6 311.4

2014 2015 2016 2017

42% 52% 60% 65%

2014 2015 2016 2017

6

SLIDE 7

For car buyers

Whilst continuing to invest in building a multi-generational business

On average 93 advert views every second of every day Added pricing indicators to signal the best priced vehicles Providing ~1.5 million consumer valuations a month ~ 450k Reviews on Auto Trader at January 2018 Added Premium level for retailers wanting to grow faster Harmonizing retailer pricing and packaging across the marketplace Providing ~3.5million trade valuations a month Moved retailers to flat monthly bills from 4,4,5 weekly billing Moved to our own core vehicle taxonomy Completely automated continuous product releases Migrated to our own integrated CRM from Salesforce.com Released 11,000+ product changes since March 15 For retailers & manufacturers and for Auto Trader

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SLIDE 8

Passionate and talented people

Underpinned by our people, culture and environment

Principle and values-led culture, promoting diversity

#32

Working in leading environments and being community -minded

SLIDE 9

Overview: 3 Years On

How we think about current market How we think about our competitive position How we think about our long- term opportunity

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SLIDE 10

Auto Trader exists to:

‘lead the digital future of the UK automotive marketplace’

SLIDE 11

New and Used Car Gross Margin £6Bn Total Automotive Advertising £1.9Bn

Auto Trader is the largest digital player in a huge ecosystem ripe for digital disruption to improve the consumer experience and industry efficiency

Classified Advertising

Source (Top to Bottom): SMMT; Department of Transport & Auto Trader Estimates; SMMT; Bank of England; Auto Trader Estimates; FLA; Ebiquity; eMarketer; Enders

OUR CURRENT FOCUS IS THE BUYING AND SELLING OF NEW AND USED CARS

Digital Automotive Advertising £1.5bn Total Automotive Advertising £1.9bn Used Finance Commission £1.0bn New and Used Car Gross Margin £6.0bn Total UK Automotive Turnover £78bn Mobility Services >£22bn Service & Maintenance £22bn Car Insurance £12bn

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£0.4bn

Sourcing, Disposing & Moving Vehicles >£0.5bn

SLIDE 12

Horizon 1

Our position as the leading digital player in the automotive market provides multiple horizons of growth with our customers over time

Horizon 2 Horizon 3

Enhance the core

Core listing products
Data tools
Finance

Become to new cars what we are in used Helping retailers

source, dispose and move vehicles

Enable transactions

nline

12

SLIDE 13 72% 8% 8% 5% 5% 3% 3% 3% 3% 2% 2% 2% 2% 1% 1% 1% 1% 1% 1%

Which website would you consider the most influential whilst used vehicle shopping?

As car buyers have moved their research online, Auto Trader has become the largest, most influential destination

Source: Auto Trader Market Tracker Study, 2017 Source: Auto Trader Brand Tracker Study, 2015/ 2017

60% 0% 10% 10% 7% 7% 5% 5% 5% 5% 2% 2% 2% 2% 2% 2% 2% 2% 1% 1% 1% 1% 1% 1%

Whi hich w h web ebsite e wou

uld y

you

u cons
nsider

er the the mos most t influen enti tial whi whilst u t used ed v vehi ehicle s e shop hopping ng?

13 91% 1% 54% 4% 10% 10% 9% 9% 93 93% 58% 8% 16 16% 8% 8% 12% 12%

Auto T Trad ader Gumtr tree Mot

tor
rs

Ca Car G r Guru rus Pistonheads ads Oct-1

15

Sep- ep-17

Prompted d br bran and aw d awar areness ss (use sed d an and d new car car)

SLIDE 14

THE OLD WORLD

Power sits with the retailer
Low tech, people-centric
Focus on local area
Opaque pricing
Finance not key to success

Which has radically changed the world of the retailer…

TODAYS WORLD

Power sits with the consumer
High -tech, internet centric
The market is UK wide
Finance is key to success
Car knowledge less necessary

Source: ”What makes a successful retailer?” Research commissioned by Auto Trader Feb 2017

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SLIDE 15

LESS SUCCESSFUL

Were good when they started
Don’t adapt
See new things as a threat
Resent consumer empowerment
Margins squeezed
Rely on old model relationship

management

Which has radically changed the world of the retailer…

SUCCESSFUL

Open minded
Borrow from other sectors
See data as an opportunity
Meet consumer on their terms
Optimise margin through speed
f sale and PPU
Spend less time “selling”

Source: ”What makes a successful retailer?” Research commissioned by Auto Trader Feb 2017

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SLIDE 16

This provides Auto Trader, progressive retailers and manufacturers the

pportunity to dramatically improve car

buying and retailing

SLIDE 17

DIGITISATION: MED-HIGH Used car research is largely done online, however this is not the case for new cars

By moving more of the car buying and selling experience online we can improve the consumer experience, dealer profitability and Auto Trader’s influence

When it comes to selling their current car, private sellers are using a largely

ffline experience, which is

the same for retailers sourcing other stock Dealer finance penetration in new is 88%, but only 30% in used trade, due to the lack

f a transparency and ease
nline

Researching and finalising the elements of a car transaction: the car you’re buying; the car you’re selling and the finance package is largely an offline process Most car transactions are completed in a 3-4 hour dealership visit, much of which could be moved

nline

DIGITISATION: LOW DIGITISATION: LOW DIGITISATION: LOW DIGITISATION: LOW

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Finance package Selling your car / Sourcing The ”deal” Research Transact

~£6bn gross margin

n B2C new and

used cars

SLIDE 18 £0.2bn Other

Core growth is underpinned by continuous improvement of the car buying experience and helping retailers improve profitability

There is a mismatch between used car retailing costs and the buying process

Strategy

The industry will become more digital and offline costs will reduce Auto Trader will be fundamental to this change through:

maintaining leadership with car

buyers

moving the car buying process online
providing products, data and

services that deliver a higher ROI to

ur retailers than the offline

alternatives they use today

Source: Auto Trader internal analysis

30%

ffline

70%

nline

Online share of research time 75 75% 10% 0% 15 15%

nline

profit

ffline

Split of retailer used gross margin Opportunity to drive down retailer costs and grow profit

£1.9bn staff

£0.4bn Dep £0.4bn Property £0.4bn Digital Marketing

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£0.1bn Offline Marketing

Opportunity

SLIDE 19

This is validated by our own data that shows retailers who spend more (ARPR), generate more sales and gross profit

Source: Auto Trader internal analysis 10 20 30 40 50 60 70 80 £0 £1,000 £2,000 £3,000 £4,000 £5,000 Proxy Sold Car Count Monthly Auto Trader Spend (£50 buckets) 10 20 30 40 50 60 70 80 90 100 £0 £1,000 £2,000 £3,000 £4,000 £5,000 Proxy Monthly Gross Profit (000) Monthly Auto Trader Spend (£50 buckets)

More spend = More cars sold More cars sold = More gross profit

SLIDE 20 60 7 1 10 5 5 2 2 2 1 1 1 2 44 25 5 4 4 4 2 2 2 1 1

New car is critical to unlocking the full £1.9bn in automotive advert spend. We have the audience and the influence

75%

3/4 of car buyers consider new cars

6.8m uniques open to

new car every month vs.

nly 90k new cars sold

to consumers Whic hich w h websit ite d do you find ind the the most in t influentia tial whil hilst t vehic hicle s sho hopping ing?

Source: Auto Trader Market Tracker Study 2017 (percentage of respondents) and Car Buyers Report 2017

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Almost 2x more than nearest competitor for new cars

SLIDE 21

£0.5bn Offline £0.5bn Digital Search £0.4bn Digital Display £0.3bn Auto Trader

£0.2bn Digital Other

However we’re only at the early stages of developing our new car buying experience, manufacturer relationships and products

Strategy

With 7 million people on Auto Trader every month potentially considering a new car versus 2.5m new car registrations in the entire year, we believe we have a big role in helping manufacturers sell new cars Today we generate <£20 million from manufacturers & agencies, but we believe we can take a meaningful share of new car advertising, by doing the following things well and consistently:

delivering the best UK new car buying

experience

mobile-led ad products with greater

scale and targeting than Facebook or Google

deepening relationship and perceptions

with manufacturers and their agencies

£1.9bn 2017 UK Automotive Digital Advertising

We estimate that manufacturers spend £900m-£1bn of this on new cars and we know in 2017 they spent almost half on digital media

21

Source: Auto Trader internal analysis, supplemented by Ebiquity and eMarketer

SLIDE 22

In addition to our B2C position, there are c.3.4 million B2B transactions, fueled in part by the c.3.4million part-exchanges, where we are yet to play a material role

Retailers source of vehicles (m)

Strategy

Sourcing vehicles is our customers’ number

ne challenge and one of their biggest costs

including buyer fees (£250-300 per car), logistics costs and depreciation. Whilst plans are only embryonic at this stage, we have a number of key assets that we can bring to bare:

>85k part-exchange leads every month
logistics capability in Motor Trade Delivery

that transports >10k cars every month

Auto Trade Mail which offers

approximately >220k retailer –to-retailer cars for sale every year

data-driven products inform retailers what

stock to source, ensuring an obtainable margin Part- exchange

1.5 3.4 0.3 5.1

Source: Auto Trader internal analysis, supplemented by PwC and BCA Prospectus & Auto Trader internal data (LTM)

Consumer Fleets / PCP Car buying services

22

1.6

Retailers

SLIDE 23

Horizon 1

Our position as the leading digital player in the automotive market provides multiple horizons of growth with our customers over time

Horizon 2 Horizon 3

Enhance the core

Core listing products
Data tools
Finance

Become to new cars what we are in used Helping retailers

source, dispose and move vehicles

Enable transactions

nline

23

SLIDE 24

Overview: 3 Years On

How we think about current market How we think about our competitive position How we think about our long- term opportunity

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SLIDE 25

13 13 41 86 153 28 28 58 48 162 52 30 33 28 143 2014 2015 2016 2017 Total Price Stock Product

The value we give to retailers has allowed us to grow ARPR through price, stock and product upsell

£996 £1,088 £1,181 £1,252 £1,384 £1,546 2012 2013 2014 2015 2016 2017

IPO

ARPR (£pcm) ARPR levers (£pcm)

£93 £71 £132 £162

Balanced over 4 year cycle

25

SLIDE 26

22 24 26 28 30 32 34 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2013 2014 2015 2016 2017 2018 Average number of live cars per retailer 280 300 320 340 360 380 400 420 440 10,000 11,000 12,000 13,000 14,000 15,000 16,000 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 2013 2014 2015 2016 2017 2018 Average 12 months live retailer cars ('000) Average number of retailers for the quarter Retailers LTM live retailer stock

Combined with a continued investment in retailer relationships this has meant we have continued to provide the largest choice of trusted car stock

While the number of retailers has stayed relatively flat (1) Car retailers make up 85% - 87% of total retailers in each quarter in the period shown

Retailers and live cars on site Live cars per car retailer (1)

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0% 5% 10% 15% 20% 25% 30% 1 - 10 11 - 20 21 - 30 31 - 100 101 - 1000 1001+ % of customers Total # cars advertised on Auto Trader Mar-14 Mar-17

20

40 60 80 100 120 140 160 1 - 10 11 - 20 21 - 30 31 - 100 101 - 1000 1001+ # of cars ('000) Total # cars advertised on Auto Trader Mar-14 Mar-17

We are seeing limited levels of consolidation within our core customer base, however large customers have grown

Distribution of customers by stock bands Distribution of live stock by bands

Although a larger proportion of our stock is now with larger groups

27

No real decline in core customer base (11-100) Car only customers included Car only customers included

SLIDE 28

However the larger, consolidating retailers invest more on Auto Trader

Stock Package level Managing products

Source: Auto Trader. Data restricted to Franchise customers for which forecourt stock is known on their website. Sample of 894 customer groups – January 2018.

89 89% 66% 66% Top 10 All others 3. 3.2 2.8 .8 Top 10 All others

% of forecourt stock advertised with Auto Trader Average package level (1=Starter, 2= Basic, 3=Standard, 4=Advanced, 5=Premium) % of retailers with a managing product

43% 3% 33% 33% Top 10 All others

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SLIDE 29

31.6 35.2 35.2 35.4 38.2 41.9 2012 2013 2014 2015 2016 2017

Financial year

Which partly offsets their volume discount leading to continued growth in revenue per car

(1) For car retailers only Average rate card

Economies of scale for retailer

2012 – 2014 CAGR: 5% 2014 – 2017 CAGR: 6%

IPO

Total advertising revenue (£) per live car per month

Cost per car for our packages decreases with the number of cars advertised

Advertising rate card (1)

# of cars advertised Cost per car

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SLIDE 30

New car registrations YoY growth of NCRs vs UCTs

(30%) (20%) (10%) 0% 10% 20% 30% (30%) (20%) (10%) 0% 10% 20% 30% Jan-07 Sep-07 May-08 Jan-09 Sep-09 May-10 Jan-11 Sep-11 May-12 Jan-13 Sep-13 May-14 Jan-15 Sep-15 May-16 Jan-17 Sep-17 YoY growth in UCTs YoY growth in NCRs Last 12 months NCRs Last 12 months UCTs (50.0%) (30.0%) (10.0%) 10.0% 30.0% 50.0% 70.0% 90.0%

0.5

1.0 1.5 2.0 2.5 3.0 Jan-06 Oct-06 Jul-07 Apr-08 Jan-09 Oct-09 Jul-10 Apr-11 Jan-12 Oct-12 Jul-13 Apr-14 Jan-15 Oct-15 Jul-16 Apr-17 Jan-18 YoY growth for the month LTM rolling NCRs (millions) YoY growth for the month LTM rollling NCRs

We saw a drop in the number of new car registrations in 2017 and early signs of a downturn in used car transactions

UCTs are not as volatile as NCRs Last 12 month rolling total Sources used: SMMT (new car registrations) and DVLA (used car transactions)

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SLIDE 31

1.3 1.5 1.7 1.9 2.1 2.3 2.5 250 300 350 400 450 500

Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Last 3 months UCTs (million) Average car stock ('000) Average Car Stock Last 3 months UCTs

A growing used car market has helped ARPR growth through stock

Average car stock (1) vs. last 3 months UCTs

(1) Car stock advertised in search on autotrader.co.uk

We did experience a drop in stock at the end of 2008

i

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However we expect marginal declines in used car volumes for 2018 and 2019

Used car transactions

Sources: DVLA, Auto Trader analysis

Forecast

7 .5 7 .1 6.9 7 .0 7 .0 7 .0 7 .2 7 .3 7 .7 8.1 8.0 7 .9 7 .9 7 .9 6.0 6.5 7.0 7.5 8.0 8.5 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Used car transactions (million) Calendar year

32

Likely expectation is for a 1-3% decline in 2018

SLIDE 33

However the UK car parc will continue to grow, making used car transaction volumes less volatile than new

UK Car Parc Average turn

2.6 2.4 2.3 2.4 2.1 2.0 2.0 1.9 2.0 2.3 2.5 2.6 2.7 2.5 2.2 1.9 2.2 2.1 2.0 2.2 1.8 1.8 1.9 1.8 1.8 1.7 1.9 2.0 (5.0) (4.0) (3.0) (2.0) (1.0)

1.0

2.0 3.0 4.0 5.0 27.0 28.0 29.0 30.0 31.0 32.0 33.0 34.0 35.0 36.0 New/ scrapped cars (millions) UK Car Parc (millions) Calendar year New Scrapped Car Parc 2.9 3.1 3.1 3.1 3.4 3.5 3.5 3.5 3.5 3.4 3.3 3.3 3.2 3.3 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Car parc turn (years) Calendar year Sources used: SMMT (car parc excluding 2017 and new car registrations); Auto Trader analysis (2017 car parc, scrappage and average turn)

33

SLIDE 34

In summary

Consolidation is happening slowly, continuing

the trend of the last 10 years

Large customers have grown and tend to be

more engaged

34

We expect used car transactions to fall,

similar or slightly more than last year

SLIDE 35

Overview: 3 Years On

How we think about current market How we think about our competitive position How we think about our long- term opportunity

35

SLIDE 36

Traditional Competitors

1995 1996 1977 2013

Magazines close

In terms of competition, the landscape remains active, but this is no different to every year of our 40+ year history

UK national magazine coverage

2005 2007 2010 2015 2016 2017 2018

Price indicator launched Search by monthly payment Mobile push

Brand Competitors

Regional Press

Autotrader.co.uk launched Valuations Reviews

Main competitors throughout history

36

Acceleration

f print to

digital Thames Valley Trader launched

SLIDE 37

69% 80% 71% 69% 80% 67% 80% 82% 63% 78% 72% 85% 84% 76%

Percentage of competitor audience visiting Auto Trader

With the majority of competitor audiences already on Auto Trader, it limits their ability to offer incremental car buyers

Auto Express Carwow eBay Motors Exchange & Mart Gumtree Motors Motors.co.uk Parkers Pistonheads RAC Cars Top Gear Trusted Dealer VCars WhatCar CarGurus

Source: comScore MMX Multi-Platform, Cross Visiting, January 2018, U.K.

37

SLIDE 38

81% 91% 93% 98% 96% 71% 87% 81% 76% 98% 92% 100% 98% 86%

Percentage of Auto Trader audience not visiting competitor site

And the vast majority of our audience is unique to Auto Trader

Auto Express Carwow eBay Motors Exchange & Mart Gumtree Motors Motors.co.uk Parkers Pistonheads RAC Cars Top Gear Trusted Dealer VCars WhatCar CarGurus

Source: comScore MMX Multi-Platform, Cross Visiting, January 2018, U.K.

38

SLIDE 39

As a result we have maintained our position and trust with car buyers

* Based on the largest tracked sites on Comscore (approx. 15 due to availability)

74.6 34.8 12.7 10.7 9.2

Auto Trader Gumtree Motors Other Motoring Portals Manufacturer Sites Dealer Sites*

Minutes spent per visitor in Jan 2018

678 138 127 66 16

Auto Trader Gumtree Motors Other Motoring Portals Manufacturer Sites Dealer Sites*

Total minutes spent in Jan 2018 (millions)

39

Source: comScore MMX Multi-Platform, Cross Visiting, January 2018, U.K.

SLIDE 40

Conclusion

We have delivered on what we said we would at IPO
There is still plenty of opportunity within our core
And there is a significant opportunity in adjacent

markets which we are yet to address

There are industry headwinds ahead

40 40

But we will continue to leverage our

very strong competitive position

SLIDE 41

Questions?

Section title

41

SLIDE 42

Improving the Car Buying Journey from search to transaction

Jason Biffin & Karolina Edwards-Smajda

Capital Markets Day

SLIDE 43

Capital Markets Day

Improving the car buying journey from search to transaction How we help improve a retailer’s business Delivering value for car manufacturers

43

SLIDE 44

The Auto Trader model

Largest consumer audience Most effective sales channel Largest choice

f trusted car

stock Best car buying experience for consumer Strong financials enabling investment

Stock based revenue model Investment in platform Investment in relationships & insight Investment in growing audience

44

SLIDE 45

Improving the car buying journey from search to transaction

Capital Markets Day

Presented by Jason Biffin & Karolina Edwards-Smajda

SLIDE 46

The Auto Trader model

Largest consumer audience Most effective sales channel Largest choice

f trusted car

stock Best car buying experience for consumer Strong financials enabling investment

Stock based revenue model Investment in platform Investment in relationships & insight Investment in growing audience

46

SLIDE 47

Improving the car buying journey from search to transaction

How are we responding?

Building trust into the consumer experience

What’s next?

The journey towards online transactions

Why are we doing it?

Consumer trend around trust and transparency

47

SLIDE 48

Why is trust & transparency so important?

94% of consumers

conduct their car buying research online

13 hours spent

researching online on average by car buyers

22%of consumers see

car dealership websites as being untrustworthy

23%of car buyers find

visiting a dealership daunting

48

Source: Google Gearshift 2017; Auto Trader Market Report 2016; Digital Excellence Research July 2016

SLIDE 49

Consumers don’t trust car dealerships

The perception amongst consumers is that they don’t trust car dealerships, with only

7% claiming to trust

them

Q8 P Plea ease e ra rate e ea each of

f t

the f e fol

llow
win

ing types es of

f com
mpanies

ies on

n t

the e extent t to

whic

ich you

u t

tru rust them em w when d doin

ing b

busin ines ess wit ith t them em. Base: A : All res respon

ndents (3

(3224); ); B Bou

ught a n

new ew c car r in in t the e past six ix mon

nths (2

(240); ); B Bou

ught a u

used c car r in in t the e past six ix mon

nths (4

(459)

Levels of trust

And with physical retailer forecourt visits declining, it’s imperative that retailers start to build trust online first

49

Source: Auto Trader Market Report 2016

SLIDE 50

But Auto Trader operates as a trusted intermediary

Q8 P Plea ease e ra rate e each of

f t

the f e fol

llow
win

ing types es of

f com
mpanies

ies on

n t

the e ex extent t to

whic

ich you

u t

tru rust them em w when d doin

ing b

busin ines ess wit ith t them em. Base: A : All res respon

ndents (3

(3224); ); B Bou

ught a n

new ew c car r in in t the e past six ix mon

nths (2

(240); ); B Bou

ught a u

used c car r in in t the e past six ix mon

nths (4

(459)

How trusted are each of the following brands?

#1 trusted brand

Auto Trader is the most trusted automotive classified brand in the UK 55% 2% 6% 4% 4%

AutoTr Trade ader CarG CarGuru rus Gumtree ee Motors.c .co.u .uk Pist stonheads ds

59 million visits

…and is the most visited automotive website - 3x larger audience than our nearest competitor

678 million minutes

…and we have the most engaged audience

50

Source: comScore MMX Multi-Platform, Cross Visiting, January 2018, U.K. Source: Auto Trader Brand Tracker Study, 2017

SLIDE 51

Has the car I’m buying ever been written off? Have you not got any satisfied customers?

51

What Auto Trader users said about car retailers…

Trust in the price of the car

they are buying

Trust in the price of the car

they are selling

Trust in the seller Trust in the car they

want to buy

Are your vehicles priced fairly? How do I know I won’t get ripped off? Is the mileage correct? Why no part-ex values? Why only

ne

picture? Do you not offer finance? Will you look after me?

51

SLIDE 52

Improving the car buying journey from search to transaction

How are we responding?

Building trust into the consumer experience

What’s next?

The journey towards online transactions

Why are we doing it?

Consumer trend around trust and transparency

52

SLIDE 53

Trust in the car they want to buy

The problems we are trying to solve Of those , 36% of consumers claim to delay or put off buying altogether What have we done? The results Exposed cars which have been involved in write-offs so it is

bvious to the consumer

Provided free history checks on every car on site

550 misleading adverts

removed from site every week

20% of car buyers found

information to be vague, hard to find or misleading when researching cars

20,000 vehicles checked

every day

BASIC CHECK

53

Source: Auto Trader Market Report 2016; Internal Auto Trader data.

SLIDE 54 54

The problems we are trying to solve Provide retailers the opportunity to differentiate themselves on the marketplace

Trust in the seller

What have we done? The results Built relationships with the leading 3rd party review sites and aggregated over 450,000 reviews Developed our own “open” review platform The #1 dealer review site in the UK Over 7

,000 retailers providing

reviews on Auto Trader

22% more time spent on full

page adverts that carry reviews

vs. those that don’t

The lack of trust consumers have with retailers

54

Source: Internal Auto Trader data. Source: Internal Auto Trader data.

SLIDE 55 55

The problems we are trying to solve Agreeing the value of their current car sited as being one of the most challenging aspects of the buying journey

Trust in the price of the car they are selling

What have we done? The results Circa 9,000 retailers choose to promote our part -ex guide tool

n their full page advert

1.5M valuations carried out by

consumers each month

33% of buyers walk away from a

negotiation due to a disagreement

n the part-ex valuation

Provided functionality for consumers to receive an instant valuation of their car based on the live market Over85,000 part-ex enquiries sent to retailers each month “We use the part exchange system in the interests of transparency. We are finding people would prefer to know what they are going to achieve in part exchange before arriving”

Retailer in Stoke 55

Source: Internal Auto Trader data.

SLIDE 56 56

The problems we are trying to solve Buyers consider it more important than history checks and the interaction with salespeople when looking to purchase a car What have we done? The results Advert with price indicator are viewed over 4m times everyday Over 75% of car buyers believe that transparent pricing is the most important factor when buying a car Launched price indicators to help consumers validate the price of a car versus other similar cars on the Auto Trader marketplace

Trust in the price of the car they are buying

Developed valuations adjusted for vehicle optional extras that power price indicators

Source: Auto Trader Market Report 2016; Internal Auto Trader data. 56

SLIDE 57 57

The problems we are trying to solve With retailer used car finance penetration at 30% there is a significant opportunity to raise awareness and subsequently increase profit for retailers What have we done? Consumers are keen to see monthly finance prices especially when many of the finance deals being

ffered are seen as confusing or

not easily found Integrated with over 6,000 retailers who provide us with their finance options

Trust in the price of the car they are buying Retailer finance and monthly price search

Partnered with Zuto to provide finance options where retailers are not authorised by the FCA The results Over 300,000 cars live with a monthly price

1m interactions with our new

finance calculator in January

57

Source: FLA; Internal Auto Trader data.

SLIDE 58

Trust in the price of the car they are buying Retailer finance and monthly price search

Buyers have the ability to search on the basis of a monthly price Buyers can then compare affordability between a total retail price and a monthly price Buyers can then choose between a PCP and HP option depending on the retailer’s finance and the consumer’s preference And finally tailor their deposit and monthly payment options to suit their circumstances 58

SLIDE 59

Improving the car buying journey from search to transaction

How are we responding?

Building trust into the consumer experience

What’s next?

The journey towards online transactions

Why are we doing it?

Consumer trend around trust and transparency

59

SLIDE 60

The appetite for transacting online

Response to buying online Auto Trader Research July 2017

33% 36% 42% 75%

60

Source: Auto Trader online transactions research 2017

SLIDE 61

It’s about bringing all components into one online journey

Price indicator Text her Dealer reviews Vehicle finance Part- exchange Car history check Vehicle delivery

61

SLIDE 62

Conclusion

We have the experience, resources and

technology to continue leading innovation in the UK marketplace

We win with consumers because we are the most

trusted and we have a clear vision that responds to car buyers’ demand for transparency

We improve complex buying experiences at

scale which makes it hard to replicate

We will extend this position by leading the

industry's transition to transacting online like most other retail categories

62

SLIDE 63

How we help improve a retailer’s business

Presented by Le Etta Pearce & Darren Moon

Capital Markets Day

SLIDE 64

The Auto Trader Model

Largest consumer audience Most effective sales channel Largest choice

f trusted car

stock Best car buying experience for consumer Strong financials enabling investment

Stock based revenue model Investment in platform Investment in relationships & insight Investment in growing audience

64

SLIDE 65

Data to improve a retailer’s performance Products to help retailers appeal to consumers

Our key themes

Partnering with

ur retailers

65

SLIDE 66

Data to improve a retailer’s performance Products to help retailers appeal to consumers

Our key themes

Partnering with

ur retailers

66

SLIDE 67

For the past 20 years we’ve helped retailers leverage our data about their business to manage performance, in a digitally evolving marketplace

67

SLIDE 68

Fragmented marketplace Engaged consumers Generating transactions

13,200 retailers
On average 420k

adverts per day

c.1.5bn searches,

generating c.53bn advert search appearances and c.3bn Full Page Advert Views per year

Part of the 5.1m

used car B2C transactions

68

Source: Internal Auto Trader data; SMMT.

SLIDE 69

We offer tools to manage performance within every retailer package

Group Retailer

69

SLIDE 70

As well as a stock management system…

700,000

sessions each month

3m

page views each month

88%

f retailers

log-in each month

70,000

logged in users each month

Source: Internal Auto Trader data 70

SLIDE 71

And data on: “where do I sell my cars?”

71

SLIDE 72

Data to improve a retailer’s performance Products to help retailers appeal to consumers

Our key themes

Partnering with

ur retailers

72

SLIDE 73

Products have been created to meet a number of different needs

1 2 3

Attract and interact with consumers Compete with other retailers

Images
Video
Chat
Reviews
Part-ex guide
Websites
Prominence products

(packaged & unpackaged)

Retailer display
Lead generation
Finance products

Manage their forecourt efficiently

i-Control
Auto Trade Mail

73

SLIDE 74

Premium

Enjoy the greatest share of desktop ad views through priority stock placement

Advanced

Boost your ad views with our bonus slot in search

Standard

Improve visibility of your stock on mobile and drive more ad views

Basic

Stand out and encourage engagement through trust and transparency

Starter

Engage your buyers through the essentials of modern online retailing Dealer Reviews 100 Images Test the Trade Part-Ex Guide Live Chat Enhanced Listings Vehicle Video Gallery Branding Priority Listing Mobile Promoted Priority Listing Desktop Dealer Reviews 100 Images Test the Trade Part-Ex Guide Live Chat Enhanced Listings Vehicle Video Gallery Branding Priority Listing Mobile Promoted Dealer Reviews 100 Images Test the Trade Part-Ex Guide Live Chat Enhanced Listings Vehicle Video Gallery Branding Priority Listing Mobile Dealer Reviews 100 Images Test the Trade Part-Ex Guide Live Chat Enhanced Listings Vehicle Video Gallery Branding Dealer Reviews 100 Images Test the Trade Part-Ex Guide Live Chat

Retailers can increase vehicle views not only by being in the right place online, but through products that increase their prominence

Advert quality Advert exposure

74

SLIDE 75

Delivering better informed consumers and better quality enquiries to retailers through a number of channels

You have a new Part-Exchange lead from Auto Trader for Craig's Cars. Reply to customer Customer details Name Michael Smith Telephone number 07762647695 Email address berkan.kurtoglu@autotrader.co.uk Interested in VRM DE63LJY View advert Description SEAT Leon 1.6 TDI SE Diesel Mileage 40,000 Price £11,500 Part exchange VRM BN66 XAL Description Ford Fiesta Ford Fiesta ST-Line Hatchback 1.0L Petrol Mileage 8,140 Part-ex valuation £10,000 (based on good condition) Advertise today for £11,000 (retail valuation) Additional information Car is high spec with dvd entertainment in the back lots of extras. Bad bits scuff in rear bumper and wheels curbed

52%

Just walk in without making prior contact

75

Source: Auto Trader Market Report 2017

SLIDE 76

Dealer finance has been brought higher up the buying funnel, making conversion at the forecourt easier

Introduce the concept of finance earlier In the process

13 hours

f online research

Dealership visit

76

Source: Auto Trader Market Report 2017

SLIDE 77

Data-driven forecourt management products (eg. i-Control)

77

SLIDE 78

Data to improve a retailer’s performance Products to help retailers appeal to consumers

Our key themes

Partnering with

ur retailers

78

SLIDE 79

We develop and support our customers through c.300 people in sales, and support delivering wider added value initiatives

1,347

retailers have attended our Masterclasses and Discovery Days

400

Regional and bespoke conferences

1,415

Retailers subscribed to our webinars

>23,000

Face -to -face meetings

c.260,000

inbound and

utbound calls

handled

79

Source: Internal Auto Trader data

SLIDE 80

The variation in customer performance is significant, so we utilise our teams internally to embed

ur products and

improve our customer performance

95 96 97 98 99 100 101 102 103 104 105 0-20 21-45 46-60 61-90 91+ Price Position Days to Sell Bandings Last Price Position Price Position Drop First Price Position

Price position drop First price position Last price position

80

Source: Internal Auto Trader data

SLIDE 81 34 20 8 12 25

5

10 15 20 25 30 35 40 45 50 0-20 21-45 46-60 61-90 91+ BOTTOM QUARTILE Sold Cars % 81

The opportunity to bridge the gap between the top and bottom quartiles is significant

43 28 10 11 8

5

10 15 20 25 30 35 40 45 50 0-20 21-45 46-60 61-90 91+ TOP QUARTILE Sold Cars %

54% of sold cars 71% of sold cars

49% of the top quartile have a managing product vs. 14% of those in the bottom quartile

81

Source: Internal Auto Trader data

SLIDE 82

Conclusion

Retailers have had to digitally evolve with

consumers, however we give unrivalled insight on their performance

Auto Trader has developed products to

generate leads, compete for prominence and manage forecourts efficiently

All delivered by a digitally skilled sales

team, partnering retailers with Auto Trader

82

SLIDE 83

Delivering value for car manufacturers

Capital Markets Day

Presented by Ian Plummer & Naomi Hahn

SLIDE 84

The Auto Trader Model

Largest consumer audience Most effective sales channel Largest choice

f trusted car

stock Best car buying experience for consumer Strong financials enabling investment

Stock based revenue model Investment in platform Investment in relationships & insight Investment in growing audience

84

SLIDE 85

Realising the new car opportunity Building valuable relationships using

ur data, insight and

expertise

Delivering value for car manufacturers

Evolving our product set and ways of working

85

SLIDE 86

Realising the new car opportunity Building valuable relationships using

ur data, insight and

expertise

Delivering value for car manufacturers

Evolving our product set and ways of working

86

SLIDE 87

The automotive industry spends a huge amount on advertising every year…

£1.9bn

total auto advertising spend

£950m

spent by manufacturers

…and the addressable digital market continues to grow

Manufacturers spend on digital

+13pp

Digital advertising market share growth H1 2014 vs. H1 2017

Source: eMarketer & Ebiquity 2017 Source: IAB H1 2017 Report

Auto Trader is the UK’s largest automotive vertical site

c.50%

£475m =

Source: IAB H1 2017 Report 87

SLIDE 88

“It’s good that you are coming to us with a new car story, which you haven’t done before; that surprised us as we didn’t see you in that way, it sounds compelling and is starting to to make us think differently.” .”

Marketing Director UK Car Brand

To increase our share, we need to challenge manufacturer perceptions 40 year heritage as a printed magazine for used cars

88

SLIDE 89

To do this we’ve built a team with industry expertise to strengthen

ur relationships with car

manufacturers

89

SLIDE 90

94%

car buyers use

nline research

to make their purchase decision

13hours

researching their next car

nline

60%

won’t visit the manufacturer website

min

10.7

If they do visit the site, they’ll spend just They spend Over

n average there

Every month we see 9 million users who spend 75 minutes on average looking for their next car

Auto Trader is ideally placed to help brands reconnect with consumers

Source: Google Gearshift 2017 Source: Auto Trader Market Report 2017 Source: Google Gearshift 2017 Source: comScore MMX Multi-Platform, Cross Visiting, January 2018, U.K

90

SLIDE 91

Our audience scale is unparalleled…

66m minutes 678m minutes

All manufacturers combined Auto Trader Total minutes/month

Source: comScore MMX Multi-Platform, Cross Visiting, January 2018, U.K

4x

10x

More minutes on site than all manufacturers combined

Source: comScore MMX Multi- Platform, Cross Visiting, January 2018, U.K

59m visits a month

91

SLIDE 92

And our users’ onsite journeys generate high quality data

£

Full end-to-end visibility with sales match capability

92

SLIDE 93

f buyers are
pen to new

cars

¾

Car buyers don’t see themselves as a new

r used buyer…

Source: Auto Trader Car Buying Journey Report 2017

NextCar

…and our “next car” user journey now reflects this Auto Trader is seen as the best source for new cars…

2x

more influential than the next nearest competitor

Which website do you find the most influential when vehicle shopping? Source: Auto Trader Car Buying Report 2017

93

SLIDE 94

Phase 1

New cars

Virtual Stock

Customers can search for brand new cars on Auto Trader. Phase 3 Consumers can see the latest new car stock available in search results.

Partnering with manufacturers and retailers

Physical new car stock

But our vision is to partner with manufacturers more closely, and move together towards online transactions

Looking ahead.

We will facilitate online transactions in partnership with manufacturers and retailers.

Phase 4

Online transactions

Phase 2 Consumers can see finance

ffers for both new and used

cars and search by their preferred monthly payment.

Finance offers

Not new or used, but ‘next’

NextCar

94

SLIDE 95

Realising the new car opportunity Building valuable relationships using

ur data, insight and

expertise

Delivering value for car manufacturers

Evolving our product set and ways of working

95

SLIDE 96

Our tools help brands understand their consumers at each stage of the journey

Who are my competitors?

Bubbles

Who am I losing

ut to?

Snakes

Why and where am I losing buyers?

Ecosystem

£

Did my advertising work?

Sales match

96

SLIDE 97

Active consideration

Brand’s question

Who are my competitor set?

Car buying stage Insight tool

Bubbles

Bubble size: percentage share of the competitor set advert views Bubble colour:

Higher percentage of ad views than my car Lower percentage of ad views than my car

Bubble positions: compares the ranking of your car in competitor lists versus

theirs in your list

Bubbles tool

Our answer

Real world competitor set (not segments) informed by big data

97

SLIDE 98

Deciding preferences

Brand’s question

Who am I losing out to?

Insight tool

Snakes

Car buying stage

Our data shows competitor models and how they change through the journey

Snakes tool

Our answer

Visualise competitor model evolution from research to decision phase

98

SLIDE 99

Realising the new car opportunity Building valuable relationships using

ur data, insight and

expertise

Delivering value for car manufacturers

Evolving our product set and ways of working

99

SLIDE 100

Our products have been designed to achieve manufacturer objectives

I need to explain the benefits of my products

Branded content Video

£

I want consumers to purchase directly from me

Online transactions

I need to convert interest and hijack my competition

Virtual Stock InSearch

I need to build awareness

High impact display

100

SLIDE 101

And in parallel, reflect digital advertising market trends

Shift to truly cross-platform native advert formats (such as in-feed) over standard advertising formats Continued market investment in video Continued usage of data to target campaigns more effectively Concerns over brand safety and viewability Shift towards the automated purchase of media, often in an auction environment

101

SLIDE 102

InSearch is our native performance product

102

SLIDE 103

InSearch delivers high performance

Brand safe inventory - IAB gold standard accredited environment Accurate targeting meets brand marketing strategies e.g. defend / conquest Average CTR performance is up to 10x times better than standard formats

0.0 0.00% 0% 0.1 0.10% 0.2 0.20% 0% 0.3 0.30% 0% 0.4 0.40% 0% 0.5 0.50% 0% 0.6 0.60% 0% 0.7 0.70% 0.8 0.80% 0% 0.9 0.90% 0% 1.00 .00% Vo Volume me Mo Mode del Vo Volume me Mo Mode del Vo Volume me Mo Mode del Vo Volume me Mo Mode del Vo Volume me Mo Mode del Vo Volume me Mo Mode del Vo Volume me Mo Mode del Vo Volume me Mo Mode del Vo Volume me Mo Mode del Vo Volume me Mo Mode del Vo Volume me Mo Mode del InSea earch 30 300 x x 250 50 300 x x 600

Defence campaign – volume brand

Click Through Rate (CTR)

103

SLIDE 104

InSearch delivers high performance

Brand safe inventory - IAB gold standard accredited environment Accurate targeting meets brand marketing strategies e.g. defend / conquest Average CTR performance is up to 10x times better than standard formats

0.00% 0.05% 0.10% 0.15% 0.20% 0.25% 0.30% 0.35% 0.40% 0.45%

Premium Brand Approved Used Campaign Premium Brand New Car Campaign Volume Brand New Car Campaign

InSearch 728 x 90 300 x 250

Competitor conquest campaigns – multiple brands

Click Through Rate (CTR)

104

SLIDE 105

105

SLIDE 106

Video will mean access to new budgets

Video is becoming an increasingly important factor in many purchase decisions

58%

f car buyers now state

they used video to help inform their next car purchase.

Source: Google Gearshift 2017

Online video is driving display advertising growth, with revenue from video products growing +46% YoY

Source: IAB H1 2017 Report H1 2016 H1 2017

£480m £699m

+46%

Brands are increasingly looking for brand safe environments to surface video content

106

SLIDE 107 107

Introducing our new video product

107

SLIDE 108 108

Enabling easy trading through programmatic & self serve

f the UK’s digital display

advertising will be traded programmatically by 2019

90%

Source: Zenith Programmatic Marketing Forecast

c.50% of our inventory is already traded

programmatically

Automated purchase of media continues to

grow, with Facebook and Google creating bespoke interfaces

We will continue to evolve this strategy

increasing programmatic trading on InSearch and video

108

SLIDE 109

Conclusion

There is a huge opportunity to help

manufacturers sell more new cars to consumers

Our manufacturer relationships are

strengthening – we have the team, audience and insights to become a valued partner

We have a high performance product suite that

meets manufacturer and industry needs – with more to come

We’re targeting a substantial increase in our

share of the £475m addressable market

pportunity in the years to come

109

SLIDE 110

Questions?

Section title

SLIDE 111